DLT Legislative Framework
In addition to its reputation as a well-known, economically stable financial centre, Gibraltar has now introduced its new legislative framework for distributed ledger technology (DLT). This came into effect on the 1st January 2018. When many governments are curtailing or even banning the use of DLT, Gibraltar has looked for an innovative approach towards it. Our government and regulator have embraced this new technology and want to lead the way in regulating companies operating in the DLT space and eventually Initial Coin Offerings (ICOs).
Considering the nature of DLT and indeed ICOs, Gibraltar’s regulatory body, the Gibraltar Financial Services Commission (GFSC) has designed the framework with flexibility in mind and has taken a principles based approach rather than a rigid rule based one.
DLT regulation will be governed by 9 core principles:
The two main aims of the DLT framework are pivotal to the success of any company, especially those within the scope of DLT:
It will make it easier for firms to open a bank account and
It will help the business gain legitimacy with customers.
The GFSC also plan on introducing the regulation of ICOs in early 2018. This will further bolster the regulatory requirements on DLT and add stability and control to ICOs that wish to be regulated.
The multiple benefits in moving your business to Gibraltar
• Favourable taxation • Strong UK links
Gibraltar has a hybrid tax system namely, a system that taxes individual Gibraltar tax residents on their worldwide earnings, but when it comes to corporate bodies, their tax liability is based on earnings accrued and derived in Gibraltar only.
This means that funds, corporate entities in general and trust arrangements established in Gibraltar and whose activities are based outside of Gibraltar and whose income is sourced outside of Gibraltar, are exempt from any taxes.
Gibraltar also enjoys a favourable tax regime with the following rates:
– Explore our small but empowering jurisdiction –
1. Startup Incentive Scheme
A Start-up Incentive Scheme was introduced for companies or limited partnerships starting up between the 5th July 2016 and 30 June 2017. Over the first three financial years of trading the company will be eligible for a tax credit equal to the tax due up to a maximum of £50,000 over each of the first three years. This will be subject to conditions, including employing at least five employees in the first year, as well as anti-avoidance measures to ensure it only applies to genuinely new businesses in Gibraltar.
2. Category 2 Status
There is also a special status called Category 2 status for high net worth individuals who relocate to Gibraltar. The Qualifying (Category 2) Individual Rules are governed by the Gibraltar Ministry of Finance and consist of specific rules and requirements that allow certain individuals to establish residence in Gibraltar and benefit from favourable, low income tax treatment. As a Category 2 Individual, you will have your Gibraltar income tax capped to the maximum, calculated on the first £80,000 of assessable income, irrespective of how much is actually earned throughout the year. The annual tax liability ranges from a minimum of £22,000 to a maximum of £29,800, depending on your individual circumstances. Tax is only paid on income remitted in Gibraltar.